How the rich deferred bonuses to avoid the 50p tax rate

Earnings rose by an unusual high of 2.1% in the latest quarter but only because bonuses were paid in April, rather than March, to benefit from the new 45p rate.

At a time when Labour is attacking the coalition for presiding over a "cost of living crisis", the latest figures on earnings contain the superficially good news that the average weekly wage, including bonus payments, rose by 2.1% between April and June compared with the same period last year - the first time the growth rate has exceeded 2% since late 2011. 

But read on and it soon becomes clear what lies behind the spike. The ONS notes that "The relatively high growth rate for April to June 2013 partly reflects unusually high bonus payments in April 2013. Some businesses have reported that they paid bonuses in March last year but in April this year." 

The ONS doesn't explain why they did so, but it might just have something to do with the fact that April was the month that the cut in the top rate of tax to 45p took effect. Had businesses paid out bonuses in March as usual, they would have been taxed at the higher rate of 50p - this was avoidance on a grand scale. 

If we strip out bonuses, average weekly earnings rose by just 1.1%, 1.8% below the rate of CPI inflation. As the Conservatives resurrect the myth that "we're all in this together", today's figures are a salutary reminder that we're not. 

George Osborne attends a press conference on July 19, 2013 during the G20 Finance Ministers and Central Bank Governors' meeting in Moscow. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Donald Trump's healthcare failure could be to his advantage

The appearance of weakness is less electorally damaging than actually removing healthcare from millions of people.

Good morning. Is it all over for Donald Trump? His approval ratings have cratered to below 40%. Now his attempt to dismantle Barack Obama's healthcare reforms have hit serious resistance from within the Republican Party, adding to the failures and retreats of his early days in office.

The problem for the GOP is that their opposition to Obamacare had more to do with the word "Obama" than the word "care". The previous President opted for a right-wing solution to the problem of the uninsured in a doomed attempt to secure bipartisan support for his healthcare reform. The politician with the biggest impact on the structures of the Affordable Care Act is Mitt Romney.

But now that the Republicans control all three branches of government they are left in a situation where they have no alternative to Obamacare that wouldn't either a) shred conservative orthodoxies on healthcare or b) create numerous and angry losers in their constituencies. The difficulties for Trump's proposal is that it does a bit of both.

Now the man who ran on his ability to cut a deal has been forced to make a take it or leave plea to Republicans in the House of Representatives: vote for this plan or say goodbye to any chance of repealing Obamacare.

But that's probably good news for Trump. The appearance of weakness and failure is less electorally damaging than actually succeeding in removing healthcare from millions of people, including people who voted for Trump.

Trump won his first term because his own negatives as a candidate weren't quite enough to drag him down on a night when he underperformed Republican candidates across the country. The historical trends all make it hard for a first-term incumbent to lose. So far, Trump's administration is largely being frustrated by the Republican establishment though he is succeeding in leveraging the Presidency for the benefit of his business empire.

But it may be that in the failure to get anything done he succeeds in once again riding Republican coattails to victory in 2020.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.